THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

LARRY KING, HOST: Tonight al-Qaeda claims responsibility for trying to bomb a U.S. airliner out of the sky on Christmas. Making America pay for reported strikes in Yemen, and they've threaten more attacks. Plus, the first Homeland Security Chief, Tom Ridge. What does he think of Janet Napolitano's controversial remarks that the system worked and her little back pedaling today? He'll tell us if President Obama's response is tough enough.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES OF AMERICA: We will continue to use every element of our national power to disrupt, to dismantle and defeat the violent extremist who threaten us.

(END VIDEO CLIP)

KING: All that and more next on "Larry King Live."

Good evening. The Christmas day bomb plot story is getting more interesting by the hour. We've got Ed Henry, CNN's Senior White House Correspondent with us from Hawaii, and Nick Robertson, CNN's Senior International Correspondent in London to talk about the very latest developments.

Now CNN has obtained photos of the underwear bomb the terror suspect allegedly used to try to bring down Flight 253. Nic, what are these interesting to say the least photos tell us?

NIC ROBERTSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: They tell us this is the way the bombs were hidden, and I spent a good part of today with a bomb-making expert who showed us the explosives, the PETN, powdered or sort o paste-like explosive and it's destructive force. What's interesting here is, Larry, that we learned today is this is a very, very stable substance.

You can bang it quite hard, you can wear it in underwear for thousands of air miles and don't have to worry about something bumping into you and the explosives going off inadvertently. But the other thing we learned is just how destructive it is. We watched a test today with enough explosive to fill the cap of my pen here and it blew a huge dent in a tiny piece of aluminum about double thickness of an aircraft skin. The amount of explosives in that underwear enough to smash a hole in the side of an aircraft, Larry.

KING: Would all those people would have been killed, do you think?

ROBERTSON: That's what the experts are weighing up. Several things factor in. Could the aircraft have landed with a big gaping hole in the side. Possibly that's been done before. If some of the control mechanisms have been damaged, if the fuel tank nearby where he was sitting had exploded because it was mostly empty, mostly fumes at the end of a long flight, that could have brought the plane down. It would have been very, very tough and according to our expert he would not have wanted to be on that aircraft when that bomb went off, Larry.

KING: Ed Henry, drama today. The president breaks off a golf game and rushes back to the compound where he and his family were staying. What happened?

ED HENRY, CNN CORRESPONDENT: Well, we were here and covering the story and all of a sudden we get word the president broke off the golf game and the motorcade left the golf course in a very rapid speed to go back to his home. Then, we understand an ambulance was sort of speeding away from the home

Obviously given the nature of the threat, given the developments in the last couple of days, a lot of people were alarmed. It turned out that one of the children, a family friend staying with the Obamas for the holidays, had basically cut open his chin and his father was one of the golfing partners of the president.

And so the president wanted to make sure that the father was able to go see his son and get the medical attention that was needed. For a brief few moments though there was quite a scare that perhaps there been a security threat at the home or maybe somebody in the first family had been injured. Thankfully, they had not been and we're also told the young boy is getting better now, Larry.

KING: Ed, the president made his first public comments about the failed Christmas day terror attack today. Here's a little of what he said.

(BEGIN VIDEO CLIP)

OBAMA: This was a serious reminder of the dangers that we face and the nature of those who threaten our homeland. Had the suspect succeed in bringing down that plane, it could have killed nearly 300 passengers and crew, innocent civilians preparing to celebrate the holidays with their family and friends. The American people should be assured that we are doing everything in our power to keep you and your family safe and secure during this busy holiday season.

(END VIDEO CLIP)

KING: Ed, what was your reaction to that?

HENRY: Well, you know, in talking to some of the president's senior-most aides, they say he's now getting up to about a half-dozen briefings a day on this and the broader terror threat even while on vacation in Hawaii. We picked it up in the last few moments and that tells you they realize this had one of this president's first real tests as commander in chief as he closes the first year to protect the American homeland.

I think they had a little issue at the top about the fact that the president didn't speak for a few days, instead was content to put out his Homeland Security Chief Janet Napolitano. And instead she came out and said the system worked, and obviously it doesn't appear that the system worked. That may have been one of the factors in finally getting the president out there to try to calm the American public, Larry.

KING: Nic, prior to Obama's statements, al-Qaeda in the Arabian Peninsula issues a statement taking credit for all of this. What's the reactions of that?

ROBERTSON: Well, you know, you got to look at it, Larry, with a little bit of (inaudible) and say is this al-Qaeda taking opportunity out of somebody else's success. Are they just trying to boosts their own support because they need more recruits and because they're getting a hard time in Afghanistan and Pakistan and inside Iraq as well.

But they did said some things in the statement that do perhaps bear out a little bit of truth. They say they developed this special bomb that Abdulmutallab used -- alleged to have used the on the aircraft. They call it a special bomb. They say they designed it and tested it to be able to get around security systems. It used PETN, this highly explosive material.

Well, we know a Yemeni went to Saudi Arabia in August and tried to kill the deputy interior minister with exactly the same type of bomb. And guess what, when Yemeni authorities went after al-Qaeda just a week before Christmas in one of their camps, what did they find? PETN. The same explosive used in this underwear bomb.

So there seems to be some things here that say al-Qaeda maybe did have something to do with it, Larry.

KING: What, Ed, is the administration's response to al-Qaeda's statement?

HENRY: Well, exactly as Nick said. They don't want to give it too much credence yet because al-Qaeda could be pumping itself up here. This suspect could also be trying to exaggerate his own influence with a terror group. He could be making up these statements about having ties to al-Qaeda.

So they're being very cool to it. They're not independently confirming an al-Qaeda's connection. They're not confirming that. The other key point I would make is that today in his remarks, the president said the U.S will not just stay on defense and be fed up.

But we'll stay on offense and go after the terrorists in places like Yemen. Why that is significance is in this al-Qaeda statement today. They claim that it's an attempted terror the threat on Christmas day was a retaliation for air strikes against al-Qaeda in Yemen in recent days. Now the U.S. has not claimed credit or responsibility for those air strikes taking out al-Qaeda leaders in recent days, but the president going out publicly and telling the word we're staying on offense against terrorists in Yemen. It seemed like a very clear signal when you talk to top white house aides that the U.S is very much trying to root out terrorists in Yemen. There's a real confrontation going on behind the scenes, Larry.

KING: Thanks, Ed Henry and Nick Robertson. Is the America taking the right steps to combat terrorism? We'll ask the former Homeland Security Chief, the first Homeland Security Chief, old friend, Tom Ridge next.

(COMMERCIAL BREAK)

KING: We welcome to "Larry King Live." Good to have him back, former Governor of Pennsylvania, Tom Ridge. He was the first United States Secretary of Homeland Security from 2001 to 2003. He's President and CEO of Ridge Global and author of the book "The Test of Our Times: America Under Siege and How We Can Be Safe Again." Tom was telling me during the break kind of an ironic story. Want to repeat it, Tom?

TOM RIDGE, FORMER SECRETARY OF HOMELAD SECURITY: A friend of mine who worked with me in the White House called me on December 22nd and reminded me that this past year that December 22nd, 2001 is the Richard Reid attempt. Remember the shoe bomber and part of the explosive material he had tried to detonate at that time was the same material that this terrorist used as well. Interesting eight years --

KING: What's your reaction to the president's statement today?

RIDGE: Well, I think he's spot on with regard to beefing up security protocols and the watch list. I think one of the more interesting observations that folks haven't made and I know Secretary Napolitano obviously clarified her statement today.

But I can tell you as first Secretary of Homeland Security, we were only a consumer of information and we really didn't generate it. You can only act on those things that you know, and the question remains in my mind what was the e-mail or what was the communication from the department of state -- from the counselor's office to the terrorist screening center.

The Department of Homeland Security doesn't run the TSA. That's the Department of Justice and the FBI. So there's a shared responsibility to keep us safe, but there's shared accountability. When the president says we need to take a look at the watch list, I think he's on to something.

What is the mentality, what's the culture, what are we going to do to make sure that more information, particularly those that kind of information that sends warning signals out, gets to the people who can act on it. Whether you're in the battlefield or in Iraq or Afghanistan or you're a screener in an airport, you need actionable information. I'm not sure all this information was in the hands of TSA at the time.

KING: Should the president have spoken sooner?

RIDGE: Well, I think those decisions -- I'm going to leave that to the White House. I think he had Secretary Napolitano out there speaking, and I think she clarified that one -- the statement she made yesterday. I understood what she was talking about.

I don't think any right thinking person unless you were very, very partisan actually believed that Secretary Napolitano thought the system worked. Obviously, it was flawed. I think what she was referring to was that after the incident occurred, there are certain procedures and protocols that you put in place. That worked smoothly.

But obviously when you have somebody who's on the counterterrorism watch list who has bought a one-way ticket and paid cash and his father, his father shows up at the counselor's office, a reputable businessman and says I think my son's gone radical, all these pieces -- all these warning signals create a puzzle, a picture that is very threatening and nobody did anything about it.

It kind reminds me of what happened in the Hasan case about six or eight weeks ago. You had different bits and pieces of information and nobody's is connecting them. There's enough there to tell you this is potentially a very dangerous situation but nobody is communicating.

KING: The current secretary did try to clarify that today on CNN's "American Morning." Watch.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: You said throughout this the system worked smoothly. What exactly worked in your opinion?

JANET NAPOLITANO, HOMELAND SECURITY SECRETARY: That's a phrase taken out of context. What I said is moving forward, meaning once the incident happened, we were able to immediately notify the 128 flights in the air as well as airports on the ground domestically, internationally. Our law enforcement partners, our other allies institute immediate safety procedures to make sure that this could not happen on other flights and that people were watching out for it on other flights even as we focused on what went wrong part of this one.

UNIDENTIFIED FEMALE: So you do recognize it didn't work smoothly leading up to this?

NAPOLITANO: Obviously, it didn't. No secretary of homeland security would say that.

(END VIDEO CLIP)

KING: Governor, have a lot of things been prevented that we don't know about?

RIDGE: Well, I think there have been. One of the things you don't know about is the number of people that we have turned away because their name is on the watch list or on the no-fly list. But the challenge, I think associated with this incident, Larry, isn't what Secretary Napolitano said on her clarification.

It's that the clash of cultures that I encountered when we set up the Department of Homeland Security, the difference between the old institutions of the cold war, be there law enforcement or intelligence community and the new department, the Department of Homeland Security, the old cold war mentality was need to know.

The new war, the new paradigm, the new enemy requires a need to share. When the president said today he wants to scrub the watch list and see what the gaps were. Understand precisely why the total picture was not available to the terrorist screening centers so that this person could not have boarded that plane.

Why the state department didn't revoke his visa immediately is beyond belief in my judgment either, but the heart of this is it's a clash of cultures and institutional challenge. DHS can only act on information it gets and I'm not sure they had all the information at its disposal.

KING: Is America more or less secure, Governor Ridge, when the time when President Bush left office compared to now. We'll ask him in 60 seconds.

(COMMERCIAL BREAK)

All right, Tom, we have bodies, we can examine bodies. We can see through clothing. We certainly beefed up security everywhere. We've got watch list, are we safer?

RIDGE: I think clearly we're safer, but it's also equally clear, given the several incidents that have occurred just in the past couple of months in this country, that we still have very serious gaps in information sharing, and we've learned given this recent incident that these are individuals who are fairly strategic in their thinking, they're very patient.

We have a long, long way to go. We're going to be at this for a long, long time for a generation or two. I'm concerned over years we've lost a sense of urgency. We're not paying attention to minutia, the details absolutely critical in making an assessment as to whether somebody should be on a plane or not. It's not about profiling.

It's about taking a looking at very important, critical pieces of information and making sure they're shared with the decision-makers. I'm afraid some of the events over the past couple months have suggested that that old paradigm, the need to know, has maybe been receded in some of these organizations. Because it doesn't appear to me that there's a willingness to share that kind of information that we need to make America as safe as we want it to be. They're shared responsibility for this across the board.

KING: Isn't it human nature if you have a heart attack, it's a terrible first week, second week, third week. If you feel good a year later, you don't think as much about taking care.

RIDGE: That's all right if you're an individual citizen taking care of -- and you want to pay little or less attention to your own welfare, but professionals have responsibilities to be vigilant 24/7. We have a responsibility not only for the Department of Homeland Security but all the multiple agencies across the federal government to be as sensitive to the possibility of a terrorist attack today, tomorrow, and in the future as we were on September 12th, 2001. We're not as sensitive, we don't have that sense of urgency, and it's time to recommit ourselves to it.

KING: What do you make of the information that two former Gitmo detainees. Men released during the Bush administration are among the leadership of al-Qaeda in the Arabian Peninsula, the same group claiming responsibility for the Christmas day thwarted attack? What do you make of that?

RIDGE: Well, I'm not surprised. We know we released some people from Guantanamo that we ended up killing on the battlefields over in that region. So I guess again it's a symptom of a larger challenge that this country had and that is how do you adjudicate the individuals that we pick up from these places, and make a determination as to whether or not they should incarcerated for a long time if not permanently.

I've said these many times before. I never thought the issue was Guantanamo because some of these people should be incarcerated forever. I'm not surprise that it happened, and we have to remind ourselves that the process and again, I take a look at this individual who has been charged criminally, does that mean he's going to get his Miranda warnings?

Does that mean the only kind of information we want to get from him is if he volunteers it. He's not a citizen of this country. He's a terrorist, and I don't think he deserves the full range of protections of our criminal justice system embodied in the Constitution of the United States.

KING: You miss being in the hunt?

RIDGE: I miss working with the extraordinary group of men and women who helped me build the department. Frankly, I do miss not knowing. You asked me some questions. I wish I could provide you a little more specific information if it was possible to do so without violating confidences. I stay in touch with a lot of good people who continue to work hard to make America safe.

KING: And we'll keep constantly in touch with you. Good seeing you again, Governor.

RIDGE: Thanks for joining you as well. Thanks very much.

KING: Happy holidays.

RIDGE: Same to you.

KING: Governor Tom Ridge, the first U.S. Secretary of Homeland Security.

KING: We have an outstanding panel to take this all in. Peter Bergen is in Washington, CNN National Security analyst. Also in Washington is Jack Rice, former CIA officer, now journalist and syndicated talk radio host. In New York is Harvey Kushner. Dr. Kushner is a terrorism expert as well Chairman of the Department of Criminal Justice at Long Island University and author of "Holy War on the Home Front, the Secret Islamic Terror Network in the United States." Finally in Washington, Larry C. Johnson. He served as deputy director of the U.S. State Department's office of counterterrorism, former CIA analyst, and CEO and founder and co- founder of Berg Associates. Peter Bergen, was the president's statement today satisfactory?

PETER BERGEN, CNN NATIONAL SECURITY ANALYST: Yes, I mean, I think it was satisfactory. I think the statement would have been -- if the plane would have blown up obviously, he would have made a statement earlier. I think so, yes.

KING: What do you think, Jack?

JACK RICE, FORMER CIA OFFICER: Well, obviously, there's been enough problems here, but he had to address this. I think it was sufficient that Napolitano and then Robert Gibbs ultimately stepped up early. Thankfully, because there were no deaths here, we didn't see the president's necessity to actually speak. On the other hand, I think it's beneficial for the American people to realize that he's watching this and he's also being briefed on this regularly. I think that's a positive step for all Americans to know.

KING: Harvey, CNN has obtained U.S. government photos of what remains of the device, which the suspect tried to blow up Flight 253. They show singed underwear with a pack of powder zoned into the crack. Your thoughts on this device, would you class this as sophisticated?

HARVEY KUSHNER, TERROR EXPERT: It's seems to be a new type of device peculiar to that region. Yemen seems to work with PETN. This type of device, they made a statement that as you know today they were experimenting with this. It certainly had enough explosive power to take down that a-330 airbus and kill all 278 passengers and 11 crew members aboard.

Quite frankly the machinery we have in place, the technology could not detect that, except possibly a scanning machine. Certainly a puffer might have picked up some of the trace elements of it. It's frightening, Larry, that eight years after 9/11 somebody could board a plane regardless of all the mistakes with that type of sophisticated weapon and look what we deal with today.

KING: What do you make of the news, Larry, that first al-Qaeda takes credit and second, the two former Gitmo detainees both released during the Bush administration are among the leadership of al-Qaeda?

LARRY C. JOHNSON, FORMER DEP. DIR., OFFICE OF COUNTERTERRORISM: I'm glad they've taken credit, because if nothing else it boosts the United States position with the government of Yemen to go on and continue to launch military strikes against what remains of the al- Qaeda camps.

These guys are not terribly bright. When they step up and they create that kind of profile, it makes it easier to follow them and identify them and kill them. All in favor of that, the Gitmo detainees, when you threw them back in the water, they decided to get back in the fight are fair game.

I think we need to correct one statement and my friend, Harvey Kushner, he wasn't incorrect. But we're not talking eight years, Larry, we're talking 15 years. Remember it was December 1994 when, Ramzi Yousef, the bomber of the first World Trade Center boarded a plane in Cebu, in the southern Philippines, he built a device in the air that was made of TATP, gun cotton, cotton balls, left it on the plane and got off and it blew up.

This was a precursor for their plan, Bojinka, to blow up 12 jumbo jets over the Pacific. So we've been dealing with this now for 15 years, and the reality, the sad reality is we still have not taken any firm measures to protect passengers in terms of installing detection systems at passenger screening check points.

Secretary Ridge, when he was in place, he did an excellent job of professionalizing TSA, putting screeners there. He did an excellent job of requiring explosive detection systems for checked baggage. But they did not address the issue of how do you screen passengers and prevent them from carrying explosives on board.

KING: Well said. Peter Bergen, what's the story with Yemen. How do you read this, al-Qaeda and Yemen? How deeply rooted?

BERGEN: Well, I take the same that they're behind this completely at face value. It accords with previous operations. They try to kill the deputy minister with a PETN bomb on August 28th. The guy hid it in his underwear. He got through metal detectors. He almost killed the prince and killed himself in the attack.

They learned from that attack that it was possible to get it past metal detectors and they did exactly the same thing with the Detroit plot. So - and also by the way, PETN is rarely used in terrorist attacks. The only ones are all ones done by al-Qaeda, including Richard Reid, the so-called shoe bomber.

Richard Reid by the way had a colleague who had a case of cold feet and didn't go through with his shoe bomb attack. He had a shoe bomb in his house in the United Kingdom. He's now in prison. The reason I mentioned that is it would be very naive to presume that's this is the only person out there. That would be wishful thinking.

It was unsuccessful as Larry points out, it was operator error or maybe the bomb wasn't made correctly. They have demonstrated they can get it through. That's a problem that we're unfortunately going to deal with in the future.

KING: The security reviews the president has ordered, will they do any good? We'll talk about it right after the break.

(COMMERCIAL BREAK)

KING: Jake Rice, the new security reviews the president has implemented, are they going to work?

RICE: We certainly hope so. Obviously, look, the fact is there's accessibility out there. When the capability is in place in some of these areas -- if we had simply taken the intelligence that was available in this case -- sometimes what people are saying now is that if we profiled this guy -- I mean, in the negative sense, I don't think that's necessary, based on the information that was available, not just the fact that he was on a watch list, admittedly a massive one, but also that he was paying cash, that he was flying one way, that his father said we have issues here. Just for those reasons alone -- I've been stopped in multiple airports based upon some of the things that I may have done or place I have come from.

The fact that this has happened to me and many other people, it's somewhat shocking this wasn't done in Lagos, this wasn't done in Amsterdam, or anyplace else. That is a failure. That's with everything we have in place right now.

KING: Harvey, do you agree with Tom Ridge that we get a little lax.

KUSHNER: I certainly agree with him. More importantly, what this former secretary said, which I think is key, he talked about culture. I could tell you this, Larry, that there are different cultures even within the different agencies that need to cooperate with each other, and get data immediately to those who need to know, actionable data.

Look, Larry Johnson, my dear friend, can tell you. He's worked for the State Department, worked for the CIA. They're different cultures in those two agencies. We don't have a unified system with DHS in which we have information. Even if we had 500,000 pieces of information, shifting it back and forth between agencies, then getting it to TSA or to local law enforcement or to state law enforcement is a monumental effort.

I can tell you, Larry, working with local law enforcement, we don't get real time data quickly enough from so-called Feds. So I think that really is the issue. And I don't know if whatever the president said is going to rectify that situation.

KING: Larry, do you agree with what Tom Ridge when he said need to know became need to share, and we seem to be going back to need to know?

JOHNSON: Not really. The problems that exist today existed under Tom Ridge and existed under Michael Chertoff. Let me give you a quick example. I was down at McGill Air Force Base two years ago working on preparing a terrorism exercise. We had to come up with who the name of FEMA was that was the point handling the emergency response. So we go on to the secure -- the secret classified level computer. We pull up the Department of Energy FEMA website. The photograph of the person in charge was Michael, heck of a job, Brown.

Larry, this was three years after the guy had left his job. And that's under the government computer. So, you know, we can't blame a new culture from Obama. I've been a critic of the Obama administration. But I think it's a little disingenuous to say, oh yeah, they're treating it differently than the others. The fact is, under the Obama administration, at least in the last several months, you've killed Nob Honn (ph) in Somalia, who was responsible for the bombing of the embassies -- one of the culprits for the embassy bombings in Tanzania and Kenya. You've gone after the pirates off of the coast of Somalia.

They've had some successes. They haven't let up on going out and doing some capture/kill operations. As you rightly noted earlier, it was two people released during the Bush administration that wound up back on the battlefield in Yemen. We still -- the Bush administration didn't deal with that. And, frankly, the Obama administration is not dealing with that properly.

We wind up with how do we deal with terrorists? Do we treat them according to our rules of law or do we put them in a military tribunal. We've got to do something. But just throwing them back on the battlefield to kill us again, that's not a plan I believe in.

KING: I'm going to ask this panel if we can really win a war against terrorism right after this.

(COMMERCIAL BREAK)

KING: We're back. Peter Bergen, logically, we can assume a terrorist is born today somewhere. Can we ever win this war?

BERGEN: Look, you can make it and you can manage it so it's essentially a nuisance, not a major strategic problem. Right now, I do think that the al Qaeda the threat to the United States is not on the strategic level. It's more on the tactical level. Even if this guy had succeeded on that plane, that would have been a very, very, very big deal. I'm not sure it would have been a 9/11 style event.

Maybe in the post-9/11 world, it would have been, but we've had American planes blow up, kill a lot of passengers, Pan Am 103 back in 1988. That didn't reorient completely American foreign policy. So what we -- winning looks like -- terrorism is going to be with us forever. The question is, is it our major national strategic problem or is it a second order threat. That's, I think, a reasonably possible scenario.

KING: Jack, can we preempt it?

RICE: No. I don't think that you can win this war. I think it's a false premise, really. In the end, in my mind, this is a whole series of battles, one after the other. And those battles take out the bad guys, in one sense, but it's also to convince the rest of the Muslim world, 1.2 plus billion people or more, that we're not there to kill the rest of them. So it's about motivating them to at least step up for their own benefit, not just our own. It's one series of battles after another. And to take out their capability is really what's important.

Peter is absolutely right when it comes to that it's always reactive.

KING: Harvey, it's always reactive though, right? They're the offense. They know where they're going. We have to react to where they're going, right?

KUSHNER: That's absolutely right. To things to extend what Peter and Jack said. I agree with Peter. We should be able to limit it. I agree with Jack when we mentioned identified what he said Muslim -- and all 1.5 billion Muslims are not our enemy.

We're not at war with a concept. We're not at war with terrorism, just like we were not at war with kamikazes or with blitzkrieg. We have to identify who the enemy is and narrowly define it. In that case, we probably then can peel it away and win that part of it.

But it's going to be a difficult process, because, unfortunately, most of the people who perform terrorist acts against American assets, both here and abroad, also have a common variable, and that is this Islamic fact. There lies the problem. We're not at war with Islam, but we're at war with a certain portion of that. We have to surgically remove that in order to contain it.

KING: Larry, what do you think?

JOHNSON: Well, I think we're in a better position today than we were on August 1st, 2001. We have a lot of talented men and women, both in the military and the CIA and the FBI, that are working together in some areas, have gone out and debilitated and destroyed key al Qaeda and Islamic fundamentalist targets. That needs to keep up.

Peter is exactly right. I like to think more of managing crabgrass. It may never go away, but you can certainly keep it from taking over your yard and creating a complete danger for everybody. Some of these crazies will always be there. We've seen them over- reach. When they tried to kill the Saudis, the Saudis then step up their efforts to against these people. When they go into Pakistan and they kill more Pakistanis, the Pakistani government, which for years was an enabler of some of these people, they helped step up the retaliation. Finally, we're seeing the same in Yemen.

I think we're moving in the right direction. It's important to keep up. Not saying it's military or law enforcement. This isn't a light beer commercial. It's both. Let's do everything.

KING: We're going to have all of them back, Peter Bergen, Jack Rice, Harvey Kushner, Dr. Kushner, and Larry C. Johnson. President Obama makes a pledge to Americans. We'll hear it in 60 seconds.

(COMMERCIAL BREAK)

KING: You've heard some of what President Obama had to say today about terrorism and what he's doing about it. Here's his vow to America in no uncertain terms. Watch.

(BEGIN VIDEO CLIP)

OBAMA: The American people should remain vigilant, but also be confident. Those plotting against us seek not only to undermine our security but also the open society and the values that we cherish as Americans. This incident, like several that have preceded it, demonstrates that an alert and courageous citizenry are far more resilient than an isolated extremist.

As a nation, we will do everything in our power to protect our country. As Americans, we will never give in to fear or division. We will be guided by our hopes, our unity and our deeply held values.

That's who we are as Americans. That's what our brave men and women in uniform are standing up for as they spend the holidays in harm's way. We will continue to do everything we can to keep America safe in the New Year and beyond.

(END VIDEO CLIP)

KING: The family of the suspect in the Christmas day terrorism attempt issued a statement from Nigeria. It says in part, "his father, having become concerned about his disappearance and stoppage of communication while studying abroad, reported the matter to Nigerian security agencies about two months ago, and to some foreign security agencies about a month and a half ago, and then sought their assistance to find and return him home. We" -- the family speaking again -- "provided them with all the information required of us to enable them to do this. It was while we were waiting for the outcome of their investigation that we arose to the shocking news. The family will continue to fully cooperate with local and international security agencies toward the investigation of this matter while we await results of the full investigation."

The statement is signed, the Abdulmutallab family, Nigeria. The terror threat isn't just a security issue. It's a political one, too. And we'll talk with Representatives Ron Paul and Sheila Jackson-Lee and our friend Ben Stein, all next.

(COMMERCIAL BREAK)

(NEWS BREAK)

KING: OK, we meet Representative Sheila Jackson-Lee. She's a member of the Homeland Security Committee and she chairs the subcommittee on Transportation Security and Infrastructure Protection. Representative Ron Paul is a Republican of Texas, member of the International Relations Committee. He was a flight surgeon in the Air Force and OBGYN in civilian life. And Ben Stein, the economist, attorney, former presidential speech writer, columnist with "Fortune Magazine."

Representative Lee, were you satisfied with the president's statement today? And do you think we're now getting on top of things?

REP. SHEILA JACKSON-LEE (D), TEXAS: Absolutely, Larry. I believe the president has always been on top of this issue of securing the homeland. It is not a partisan issue. It's not a Democratic issue or a Republican issue. And he stood today and indicated that we now are moving forward on some of the items that we've already done, improving our security and screening, looking to ensure that we're going after the terrorists who want to come after us, finding al Qaeda wherever it is, and yes, doing an inventory and investigation on what happened and why.

But I believe that there are several issues we have to address. And one of them is the serious stove piping of intelligence, communicating information that could have prevented this individual from boarding this plane, flight 253.

KING: Congressman Paul, does -- is politics outside the door here?

REP. RON PAUL (R), TEXAS: Well, I don't know why. It depends on your definition of politics. If you disagree, I guess it's political. If you agree, then it isn't. But, no, the answer to your first question, you know, the statement wasn't all that satisfactory to me. Sort of putting the pressure on the people -- if we are just more vigilant.

It seems to me that the people had the responsibility in that embassy should have been more vigilant. We're right now spending 75 billion dollars for intelligence gathering. And look at what we have. We had FBI agents telling us about the pilots that were flying but not landing an airplane before 9/11. And here we have this incident.

So I would say we come up way short. I think there's a fundamental flaw in the system. That is government is incapable of doing it. Everything else in this country, all the businesses and factories and hotels and everything, they are protected by the owners and by private security. But, all of a sudden, if you own an airplane, you have to depend on the bureaucracy and 75 billion dollars worth of intelligence gathering. And all of a sudden, we're all going to be safe as long as we're alert, and tell everybody what's going on.

KING: But governments are responsible to do that then, aren't they? We can't have private industry run our security system.

BEN STEIN, ECONOMIST: Governments are totally responsible. I was stunned at what President Obama said today. I mean, it was as if someone said after Pearl Harbor, OK, we've all got to be vigilant against the Japanese and the Germans. It's the government's job to protect us. We're paying a fortune in taxes and debt to have them do it. They're not taking it seriously. They're being like bureaucrats, and not really -- just doing 9:00 to 5:00 work and not getting the job done.

Look, this is a war. We've said it over and over again. It's not a war against Islam. But it is a war against terrorists. We know a lot about them. It's not getting shared. I think you get -- I'm not a stockholder of IBM, but I think you could give this job to IBM. And in about a month, they'd come up with a system where there would be little dots going off on a million people's desks in the bureaucracy if somebody like this Nigerian guy was trying to get on an airplane. Let's get to work on it like we mean it.

KING: Congresswoman Lee, you want to respond to that?

LEE: I do, frankly. We are getting to work. We have been getting to work. But there are problems. And, frankly, this needs to be addressed by Congress and by the administration. The stove-piping that I was suggesting is a very obvious. This individual, who had family members who notified our embassy in Nigeria, and that information was not transmitted anywhere else until Homeland Security.

It's obvious that Homeland Security should be the focal point and the key in terms of acting on any threat to the homeland. That means that the information that we received, that was a viable behavioral assessment that you could have made on this individual. He went to Yemen. He has become radicalized. His family has called. And, therefore, there was a basis of acting.

We don't need to talk about 75 billion. By the way, my friends on the other side of the aisle voted against aviation security funding and also explosives funding.

But what the president can do, added, Larry, what I would suggest that he do, is to make a recess appointment to the individual that is being held up as the TSA administrator by a Republican senator. Leadership is important in this aspect. So I believe the government is responsible. I take responsibility and we --

STEIN: Larry, we don't need --

KING: I need to get a break in. Hold it, Ben. Hold it. I've got to get a break in. We'll have Ben and Ron respond right after this.

(COMMERCIAL BREAK)

KING: Ron Paul, you want to respond first to the congresswoman and then Ben.

PAUL: Yes, I do.

KING: Go ahead.

PAUL: One thing that is missing here is never asking the question what is the motive? He said why he was -- he did it. He said it was because we bombed Yemen two weeks ago. That was his motive. Osama bin Laden said that he has a plan for America. First, he wants to bog us down in the Middle East in a no-win war. He wants to bankrupt this country, demoralize us, as well as have us do things that motivate people to join his radical movement.

It seems like we've fallen into his trap. Why is it off base? Today, when the gentleman indicated that he did it because of the bombing, you know what the administration said? They dismissed it. It can't possibly be so. If you dismiss motivations for why they hate us, we can never resolve this. There's hate on both sides. You have to ask the question, why do they hate? And they usually come up with a reason. And we're foolish not to take that into consideration.

KING: Ben?

STEIN: Well, that's -- I have never heard anything quite like that in my whole life. What he's saying, basically, is we are doing something wrong by defending ourselves. Look, if these terrorists are trying to kill the government of Yemen, we've got to help defend them. They're our friends. We can't just let al Qaeda run wild. If we try to stop them --

PAUL: Why?

STEIN: Why should we stop them? Because they are terrorists and murderers and they're very anti-American.

LEE: Larry, I'd like to respond to some of these points that are being made.

KING: Let's go back to Sheila.

(CROSS TALK)

KING: Look at this, folks. Two republicans going at it. This is fascinating. With a democratic liberal in the middle.

LEE: I can referee between the two of them.

(CROSS TALK)

LEE: Let me referee, please.

KING: All right. Sheila, say something.

LEE: Yeah, let me referee, please. That is interesting.

KING: Both have good points, right?

LEE: They have good points. Let me clarify and try to say that Congressman Paul has a point on our positions that we took in Iraq, which obviously created a very terrible atmosphere, and we all asked the questions what were the results. And, of course, Afghanistan is still a question. But we must be reminded that the terrorists acted under President Bush's clock. And so this can't be an issue of the president's inactivity, per se, and a lack of commitment to the homeland.

But we have to do better. And I believe we need to have behavioral assessment. There was no reason for this individual to have a visa that still was in place until 2010 for them to be able to travel. There was no reason for him not to be detected because of his behavior. Behavioral assessment. We need to make the homeland security of the nation focus. Secretary of Homeland Secretary should be the point person and that person should establish a road map that then allows us to fund and to put resources accordingly. And finally, the president --

KING: Guys, we're out of time.

LEE: The president should put in place the NTSA administrator by way of a recess appointment.

KING: Death, taxes and these three are going to be back tomorrow. It's time now for Erica Hill and "AC 360." Erica?